Spratt v. Pfeifle , 115 Mont. 232 ( 1943 )

I cannot agree with the majority opinion, which, it seems to me, gives too little effect to pleadings, evidence and law, and while I deplore long opinions, whether majority or minority ones, the circumstances necessitate a more complete statement of all three elements than the decision contains.

Plaintiff sued to foreclose a vendor's lien, and appeals from an adverse judgment rendered by the district judge after trial without a jury. The only remedy sought was against Conrad Pfeifle, the sole purchaser under the contract sued upon (hereinafter called the defendant), except that his wife was joined also to foreclose any interest she might have in the land. She answered disclaiming any interest.

The complaint set forth the contract and alleged that upon its execution defendant entered into possession of the land and ever since had had possession thereof; that defendant had defaulted in the payment of taxes, interest and principal; that plaintiff and his predecessors in interest had fully performed the contract; that on April 4, 1933, while defendant was in default, a written contract was made by which the land was leased to defendant for the crop years of 1933-1934 and defendant agreed to deliver to plaintiff all crops raised, the proceeds to be applied first upon taxes, delinquent and current, and second upon accrued interest and principal; that it was further agreed that if, at the expiration of the lease, payments satisfactory to the trustees had been made the "contract will be restored and reinstated;" that defendant did make satisfactory payments and the contract for deed was therefore reinstated; that plaintiff elected to enforce the contract and was ready to deliver a deed to defendant upon payment of the balance due.

The answer admitted the contract and the defaults, but alleged that on December 15, 1932, defendant had quitclaimed the property, that the contract was thereupon terminated, and that about three months later he entered into a new agreement with plaintiff which "was a lease of said land with the provision that under certain terms and conditions the previous contract could be revived and reinstated and * * * that the said original contract was never revived or reinstated." Thus the answer affirmatively pleaded that the second agreement was more than a lease and related to the reinstatement of the original agreement, but pleaded the conclusion that the latter was never reinstated thereunder.

As a first affirmative defense, defendant alleged that an oral agreement was made by the parties by which defendant was to release and quitclaim all his interest in the premises "in full satisfaction of all obligations under the said contract" and was to receive a lease "with the privilege of reviving said contract to purchase;" that the quitclaim deed of December 15, 1932, and the agreement of April 4, 1933, were made for that purpose; that the deed absolutely terminated the original contract; that the latter "was never revived nor renewed by the parties heretosubsequent to April 4, 1933, * * * either orally or in writing;" that such revival or renewal must under certain statutes of limitation be in writing; and that there is not now, and since December 15, 1932, there has not been, any agreement between the parties "concerning the purchase of said land;" that the agreement of April 4, 1933, contained the following provision: "It is agreed and understood between the parties hereto, that second party held a certain `contract for deed' to the above premises, but that he is in default as to payments of interest and principal, for several years, and that there is also delinquent taxes on said lands. He agrees to deliver to First Parties all the crops raised on said lands for 1933 and 1934, free of expense to First Party, and said proceeds shall be applied towards payment of taxes, delinquent and current, first, and then on back interest and principal. He has surrendered the premises back, by way of quitclaim deed, dated December 15th, 1932, to First Parties. If, at the expiration of this lease, Second Party shall have made payments as to taxes, interest, and principal, satisfactory to First Parties, contract will be restored and reinstated."

Thus, in spite of the pleading of the conclusion that a revival or renewal subsequent to April 4, 1933, must be in writing, and the further conclusions that the purchase contract "was never revived nor renewed" after April 4, 1933, and that there had been no agreement concerning the purchase of the land since December 15, 1932, the question presented by the first affirmative defense is the interpretation of the final agreement under the circumstances shown.

As a second affirmative defense defendant alleged that he was uneducated and unable to read or write, except to sign his name, and that in all dealings with plaintiff he relied upon plaintiff's agent, M.J. Breen (but not that through fraud, mistake or accident the document failed to express the real intention of the parties); that it was agreed in 1932 that, in view of his defaults, he would quitclaim the land to plaintiff in abandonment of the original purchase contract and "that thereafter, in the future, should the parties so desire, defendant might again purchase the land;" that subsequently defendant leased the premises from plaintiff for the years 1933-1934 under the lease of April 4, 1933; "that this answeringdefendant understood by said lease that he was to turn over all crops raised on said premises to plaintiff herein and that if he did so, and if both parties mutually desired to do so, defendant would be allowed to repurchase the said premises upon the same terms and conditions as were contained in the original contract to purchase, and that he would be given credit for all payments he had made up to that time, or would make under the terms of said lease, upon the purchase price of said premises; anddefendant understood further that at the expiration of the term of said lease, the same would expire unless the parties either executed a new contract for the purchase of said premises, or mutually agreed to revive the old contract; that in accordance with the terms of said lease, defendant turned over to plaintiff all crops raised thereon, amounting to the sum of $900, paid on or about September 4, 1934; that at the conclusion of the term of said lease no new contract to purchase was entered into, nor was the old one revived." Thus the question tendered by the second affirmative defense is whether the language of the agreement, or defendant's alleged understanding of it, is to govern.

It is apparent that the latter pleading is insufficient to constitute a defense to plaintiff's cause of action. It alleges no absurdity (sec. 7529, Rev. Codes), ambiguity (sec. 7540, Rev. Codes), repugnancy (sec. 7543, Rev. Codes), inconsistency (sec. 7544, Rev. Codes) or uncertainty (sec. 7545, Rev. Codes) other than that which might result from the printed provision for sale by the lessor, of which, as noted below, sections 7542 and 10523, Revised Codes, dispose; it does not allege that through fraud, mistake or accident the contract failed to express the real intention of the parties (sec. 7531, Rev. Codes); it states no facts showing that his understanding of the agreement was affected by any ambiguity or uncertainty in the words used, or if so that plaintiff was aware of such understanding on his part (sec. 7540, Rev. Codes); and the evidence, as below outlined, shows that defendant did not understand it as alleged in this defense. It does not show that the subject matter or the circumstances give other meaning to the contract than its words naturally import (sec. 7538, Rev. Codes). The mere allegation as to his understanding of the written agreement is clearly insufficient to change its meaning. For in general, the language of a contract governs its interpretation (sec. 7529, Rev. Codes) and is to be understood in its ordinary and popular sense (sec. 7535, Rev. Codes); and the intention of the parties is, if possible, to be ascertained from the writing alone (sec. 7530); otherwise a written contract would not be worth the paper and ink used. The insufficiency of this defense was not in any way cured by the evidence.

The pleadings thus show that the contract of April 4, 1933, was more than a lease, and that it constituted part of the same transaction by which the quitclaim deed was given on December 15, 1932. Read together, as statute (sec. 7533, Rev. Codes) and reason require, the two documents effected at most a suspension, revival and modification of the original purchase contract; but the suspension pending the satisfactory payments was obviously not of defendant's right to protect his equity by completing the purchase, since full payment would necessarily constitute a payment satisfactory to plaintiff. His right of purchase therefore existed throughout the so-called lease period, and he had more than a leasehold interest.

The issues framed by the pleadings were not materially altered by the evidence submitted. The testimony showed that nothing was paid after the first $600; that in December, 1932, when a total of $1,900 principal was due and unpaid, with interest and taxes, plaintiff's representative, Breen, desired to obtain additional security by deeding the land to defendant and obtaining a mortgage covering both this land and an additional quarter section belonging to the defendant's wife; that upon the latter's refusal to sign such mortgage, Breen obtained from defendant a quitclaim deed of the quarter section in controversy. According to the pleadings and evidence of both parties, it was then understood that a further agreement should be entered into and the agreement was in fact made on April 4, 1933, upon a printed "farm rental contract" form, leasing the premises to defendant from April 4, 1933, to November 1, 1934, and providing that all the crops should be delivered to plaintiff to be applied upon taxes, "back interest and principal," and that if the payments were satisfactory to plaintiff, the original "contract will be restored and reinstated."

The printed lease form had the usual reservation of lessor's right to sell the premises during the term of the contract with protection of lessee's occupancy and crops for the current crop season. Breen testified that it was through an oversight that this provision was not stricken; but at any rate the printed provision is inconsistent with the main paragraph, which was typewritten and which clearly shows the intent of the parties. It is the paragraph pleaded in the affirmative defenses and set forth above, relative to the restoration and reinstatement of the purchase contract upon satisfactory payments being made. Being utterly inconsistent with the provision of the printed form for sale to others than lessee, it controls the latter (secs. 7542 and 10523, Rev. Codes.)

Furthermore, the evidence showed that defendant at all times understood and acquiesced in the new agreement, with express reference to the typewritten paragraph. For (1) he accepted the arrangement, which required him to pay over the entire crop, and which therefore gave him nothing but the provision that if the proceeds were satisfactory to plaintiff the old contract would be restored and reinstated; (2) the entire crop proceeds were to be credited upon taxes, delinquent and current, and upon "back interest and principal" under the old contract; (3) at the end of the second and last crop year covered by the new agreement, when the crop proceeds for the two years, according to defendant's own testimony, were not over $100 or $200, he added enough of his own funds to make a total payment of $900, obviously so that it would be satisfactory to plaintiff, since he attempted no other explantion; (4) he stayed in possession thereafter, although the "lease" agreement had expired and although, as pleaded by him and as pointed out in the majority opinion, it expressly provided that unless renewed in writing it would end without notice, that he would at once vacate, and that his remaining would not be construed as renewing the lease period; (5) in 1936, according to Halcro, defendant offered to lease him this land and his wife's adjoining quarter section, and the lease was accordingly made; (6) the crops were negligible in 1936 and 1937, but in 1938, when 668.2 bushels of wheat were raised on this land, defendant, according to Halcro's testimony, had the latter segregate the crops from the two tracts; (7) defendant used in 1938 proceeds for his own purposes and testified that he did not at first know they were from this land, but that when he learned that fact he did nothing about it; (8) in 1939, when asked by plaintiff's agent, Breen, for a payment, he said that he could pay only what the land produced, and paid over the $73.12 landlord's share received from Halcro; (9) defendant then, according to Breen's testimony, which he did not deny, agreed to apply for a federal farm loan "to clean up the contract" if plaintiff would reduce the amount due; (10) defendant applied for, and received, federal agricultural payments for this land in 1937, 1938 and 1940, all applications being signed by defendant as owner and showing Halcro as tenant; (11) in 1939, at Breen's insistence, defendant personally summer-fallowed part of the land; and (12) it was not until 1939 or 1940, according to the evidence, that defendant ever disowned interest in the land.

In spite of the pleadings and the evidence, the trial court found, as set forth in the majority opinion, that the quitclaim deed and the "lease" absolutely terminated the sale and purchase agreement; and the court concluded that the latter was never revived nor renewed. Thus the whole purpose and purport of the agreement of April 4, 1933, as shown by the pleadings and the evidence, are waved aside and the agreement construed as an ordinary lease. That action the majority opinion affirms.

It goes further and concludes that in the transactions Pfeifle did not "exercise any judgment of his own but did what Breen told him to do and fully depended on Breen for advice," which is within neither the pleadings nor the evidence.

It seems obvious to me that the findings and conclusions, which were based upon the view that the so-called lease evidenced plaintiff's full resumption of title under the quitclaim deed and his full cancellation of the sale, were erroneous, and that the two documents constituted merely a suspension, revival and modification of the original purchase agreement by giving defendant until November 1, 1934, within which to protect and fully reinstate his rights by making satisfactory payments. Whether the errors are reversible depends on the questions presented by the pleadings, namely, the correct interpretation of the modified agreement, and in particular whether the latter required a further written agreement at the end of the two-year "lease" period in order fully to reinstate the purchase contract.

It is significant that the agreement provides that upon defendant's making payments satisfactory to plaintiff, the contract "will be restored and reinstated," not that a new meeting of the minds will then be negotiated for that purpose, which of course could not be a binding agreement, since it could not be enforced. Clearly, upon the making of the satisfactory payments the parties were entitled to regard the contract as automatically "restored and reinstated," and obviously they so regarded it. That is the only meaning which the provision could have had, and no further writing was necessary.

It is true that the terms and dates of payment were not stated, but the indefiniteness is not sufficient to invalidate the contract. For, as noted above, there can be no question that throughout the so-called leasehold period he had the right to complete payment, and that upon making during that period satisfactory payments short of the entire balance due, he had at least a reasonable time thereafter within which to complete payments (sec. 7548, Rev. Codes). Furthermore, his pleadings go further and allege his understanding that his extended right of repurchase was to be "upon the same terms and conditions as were contained in the original agreement," and therefore upon partial payments over a term of years; and his occupancy for at least five years after 1934, with plaintiff's assent, confirms that interpretation by both parties.

Defendant contends that the contract lacked mutuality because his rights were made to depend upon plaintiff's satisfaction with his payments, and therefore depended upon plaintiff's caprice. However, it is well settled that the test under such provision is whether the payments would be considered satisfactory by a reasonable person acting in good faith. (Waite v. Shoemaker Co., 50 Mont. 264, 146 P. 736; Ogg v. Herman, 71 Mont. 10,227 P. 476; Calvin v. Custer County, 111 Mont. 162,107 P.2d 134.)

It would seem that the payment of $900 should be satisfactory to a reasonable person, since the full crop on the land amounted to not over $100 or $200 and the landlord's usual one-fourth share of that crop, under the other leases shown, would have been only about $25 or $50, making a net payment out of defendant's pocket of some $850 or $875, nearly equivalent to two years' principal payments under the original contract. However, it is unnecessary to consider the sufficiency of the payments; for since, by defendant's own testimony, they far exceeded the crop proceeds to which plaintiff was entitled either as the usual landlord's share or under the agreement of April 4, 1933, and since plaintiff accepted them without objection and permitted defendant to remain in possession for five or six years thereafter, it is obvious that if it were defendant who was trying to enforce the purchase contract plaintiff would not be heard, under the circumstances, to contend that the payments were insufficient and the contract dead. While the new agreement required only the payment of the small crop proceeds, defendant obviously knew or assumed that they would not be satisfactory to plaintiff but that the additional $700 or $800 would be so; for he paid the money at practically the end of the "lease" period and remained in possession for at least five years thereafter as of right.

It seems clear that the defendant understood and accepted the agreement as made, and that he did not seek to adopt the construction of the contract now urged by him until he concluded about 1939 or 1940 that he should repudiate the contract and avoid any liability under it. The situation is obviously one of those in which the parties have knowingly entered into a contract which, in view of subsequent events, one party without the other's fault has found burdensome and therefore now seeks to avoid. The situation may be unfortunate from the defendant's standpoint, but he has made his contract and the court has no authority to alter it for him; he has shown no equitable ground justifying the court's interference between the parties, and it seems to me that the plaintiff is clearly entitled to recover under the contract as made by them.

In my opinion the judgment should be reversed with directions to the trial court to enter judgment for plaintiff for the balance due from defendant under the contract, and for the foreclosure of the vendor's lien.

Rehearing denied November 16, 1940.